SAP Leaps Ahead in Linux ERP Market

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“The number of companies running R/3 on Linux has climbed from 40
in September 1999, to 400 today.
“

Consumer Electronic AG, is a Linux trailblazer. Two years ago, the Munich, Germany-based chip distributor decided to replace its enterprise resource planning (ERP) system, which was holding back the company’s business growth. “We wanted to make a major push into new international markets and the product simply couldn’t support that function,” says Detlef Stuewe, the manager of information systems for the company.

After evaluating various ERP systems, Consumer Electronic settled on R/3, from Walldorf, Germany-based SAP AG. Consumer Electronic–which has been running its Web and e-mail servers on Linux since 1995–signed up as a beta site for the Linux version of the product. “We thought we would get better support from SAP as one of its first Linux implementations than we would have if we were its 5,000th Windows NT customer,” joked Stuewe.

Stuewe believes that logic proved to be correct. SAP helped the company complete its R/3 deployment in six months, a process that was completed in the fall of 1999. When questions arose, says Stuewe, he was sent right to SAP’s top Linux engineers. “If we’d been running on Windows NT,” he says, “I would have had to work my way through a series of customer service reps first.”

Yet SAP is an anomaly among top ERP suppliers. While the German application behemoth is delivering Linux applications, competitors Lawson Software Inc., PeopleSoft Inc., and Oracle Corp. are still only talking about supporting it, and have yet to set any firm delivery dates.

Lawson Hasn’t Seen Much Demand

“We actually began working on our Linux port about a year ago and have many of the pieces in place to deliver such a product,” says Bill Keatts, vice president of technical development at Lawson. “We just haven’t seen much demand for it yet; in fact, I haven’t heard of one customer requesting it.”

Kenwood Americas Corp., the Long Beach, Calif. U.S. subsidiary of Japan-based Kenwood Corp., represents a potential customer. For about 15 years, the 250-person operation relied on a McDonnell Douglas Inc. minicomputer and the Pick operating system to run its order entry, inventory and control, and general ledger systems.

In 1996, Kenwood Americas started to migrate to a new ERP system running on IBM’s AS/400 mid-range system but ran into problems with the applications. As an interim step, the consumer electronics firm used jBASE from jBASE Software Inc., Boston, Mass. to port its applications to a Dell Computer Corp., PowerEdge server, running the Red Hat Inc.’s Linux distribution. “We had been using Linux to support our DNS and e-mail systems,” explained Gary Calvin, a systems integration specialist at Kenwood. “Since we found it to be easy to install and reliable, we decided to use it until we found another ERP system.”

While the company would like to continue using Linux, it has found interest in the operating system among most ERP vendors to be non-existent. “Vendors are putting more time and effort into Solaris or Windows and pretty much ignoring Linux,” says Calvin.

SAP: End-to-End Support For Linux

That has pretty much left the field to SAP. And SAP–perhaps because it is based in Europe, where Linux is more widely accepted than in the U.S.–has wasted no time. The company stated its intention to deliver a Linux version of R/3 in March 1999, and made it generally available at the beginning of this year.

“We knew that we had to deliver more than just a Linux version of our software for companies to feel comfortable with it,” says Dr. Peter Barth, director of corporate marketing at SAP. “We needed to put a comprehensive support infrastructure in place also.”

So, the company has been working with leading hardware partners, service organizations, and database suppliers to provide end-to-end support for Linux customers. In addition, SAP’s LinuxLab worked with Red Hat to deliver a special version of its distribution, which is identified by the label: “Certified by SAP LinuxLab”. This product features full native language support so Linux can be used for multi-national operations, a feature Consumer Electronic found appealing. “We wanted to deploy an ERP system that would run in the same manner in our home office as it would in the U.S., England, Switzerland, or Japan,” says Stuewe.

QAD Inc., in Carpinteria, Calif., has followed SAP’s lead into the Linux market. The software provider has been a key ERP supplier among mid-market multi-national manufacturers and distributors. In March, the ERP vendor announced the availability of its QAD MFG/PRO ERP applications, which are designed to automate manufacturers’ supply chains, on Red Hat’s Linux distribution. While a few QAD customers have asked about the Linux port, says QAD spokesman David Claus, “as of yet, no one has purchased it.”

Other vendors seem poised to move into the market. “One or two major deals is all that’s needed for us to get into the Linux market,” says Lawson’s Keatts.

Such sales are happening at SAP. “We’ve been quite pleased with acceptance of our Linux products; the market has evolved faster than we anticipated,” notes Barth. The number of companies running R/3 on Linux has climbed steadily from 40 in September 1999, to 100 at the beginning of this year, to 400 at present. Most of these installations, according to sources close to the company, are in Linux-friendly Europe.

If competitors take note of those numbers, however, Kenwood America and other companies in both Europe and the U.S. will soon be able to choose from a number of ERP packages running on Linux.